Your Company Stock Plan Is An Important Source Of Future Wealth

SFG can help you with your:

  • Performance Awards
  • Performance Stock
  • Performance Stock Units
  • Stock Appreciation Rights
  • Strategic stock option planning
  • Restricted stock and deferred compensation strategies
  • Executive transition services
  • Complex tax and delicate regulation issues, such as sales under 10b5-1, hedging, and transfers

While there are many different kinds of restricted stock, and the tax and forfeiture rules associated with them can be very complex, two of the most popular involve the granting of Restricted Stock Units (RSUs) and Non-Qualified Options (NQOs).

In some firms, executives may choose which stock plan they prefer; and, in a few cases, executives may choose both. When presented with a choice, knowing which direction to take can make a big difference in compensation as well as tax considerations down the road.

Not All Deferred Compensation Plans Are Created Equal

How much of your salary and your bonus should go into your employer’s deferred compensation plan? In most cases, you can allocate 100% of your bonus, but only a percentage of your salary. While the money enters the plan on a pre-taxbasis, while retaining the chance to grow on a tax-deferred basis, some plans require that the Medicare tax must
be paid up front.

Companies will frequently approach their executive plan participants in October and November to determine what percentage of salary and bonus an executive wishes to contribute to the plan. This is the time for you to take out the crystal ball and speculate about what will happen to you and your family in the coming year. Will there be enough money set aside for emergencies? What should your budget look like? How much cash flow will you need?

It’s only after taking your best guesses at those questions with the help of a financial advisor that you can make an informed decision about what percentage of your compensation should be deployed to your employer’s plan.

Which direction should you take? SFG can help, contact us today.